Edcon stuck between rocky loans and a hard trading place
Credit sales have dwindled to 35% of total sales, down from 51% five years ago — and there is little hope on the horizon as consumers feel the pinch
When Absa bought Edcon’s debtors book in 2012, it was worth about R8.8bn. Today, it makes up 20% of the group’s new accounts, while Edcon’s in-house book is valued at about R330m. As SA’s largest apparel retailer by store footprint, Edcon’s overreliance on credit sales has skewed sales. But consumers’ limited spending capacity has made it difficult for the retailer to extend credit. Edcon could not comment prior to the release of its annual results scheduled for Thursday. Sasfin Wealth senior equity analyst Alec Abraham says consumers do not have access to much money in the current economic environment. "It’s all well and good to grow credit when there’s visibility and you are going to get that money back. But the reality is that, given the macroeconomic fundamentals, the outlook for growing incomes to enable those customers to pay back their loans, doesn’t look particularly good," Abraham says. In the third quarter of 2016-17, Edcon’s credit sales contributed 35.3% of total retail ...
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